Incentives for tea smallholders

Banks asked to differ loan interest payments:

Ramani Kangaraarachchi

The Central Bank Governor will meet all bank officials today to discuss the possibilities of helping tea smallholders to overcome difficulties they are facing as a result of the drop in tea prices at the last auctions.

A special meeting was held with President Mahinda Rajapaksa where all the stakeholders discussed this matter at the Temple Trees on Friday.

Chairman, Tea Research Institute, Dr. Gerry Jayawardena said over 400,000 tea smallholders are affected by this down turn in the global economy and it is expected to normalise in two weeks time.

The main reason for this situation is the depreciation of currency rates in Iran, Russia and the Middle East, who are the main tea buyers of Sri Lanka.

Chairman Tea Board Lalith Hettiarachchi said 60 per cent of the tea was left unsold at the auction last week and it was a serious situation.

Brokers are not willing to advance money for tea smallholders and the smallholders are unable to carry out daily operations.

Hettiarachchi said stakeholders have proposed the Government to give some financial support from the banks.

The Tea Board also announced that it would purchase 925,000 kg of low and mid grown tea for Rs. 250 million at this week’s auction. Apart from that, tea producers have been advised to go slow in producing tea for the time being and produce only high quality teas. He also said they have requested the banks to differ interest repayments on loans for a period of six months.

Vice Chairman, Tea Small Holders’ Association said this is an unaffordable situation for the smallholders although the large scale manufacturers could afford to operate for sometime. He said some immediate action has to be taken.

Chairman Advisory Committee - Tea Cluster under the Ministry of Industries Rohantha Athukorala said the current global financial crisis had an impact on the commodity prices globally.

Therefore, it has mainly affected international tea prices as well. This issue has put the Sri Lankan economy at stake,” he said.

He said that given the current situation what Sri Lanka has to do as a short term strategy is to purchase tea leaf 50 per cent of the value at the point of purchase and the balance to be paid after the sale of leaf.

He also said Sri Lanka makes high quality branded tea which will have a lesser impact due to the current turmoil as the tea producers catering to a different clientele. Athukorala said this impact mainly affected bulk tea exports and not for the branded tea segment or market.

Therefore Sri Lanka Tea Board must be given funds to tea producers to build at least five more brands like Dilmah and Mlesna,” He said.